October 24, 2006

Tackling Business Method Patents [4:44 pm]

(A TimesSelect article in today’s paper, so read it at the International Herald Tribune instead) Patent law is getting tax crazy - pdf

As the American tax law gets more and more complicated, lawyers have come up with one more way to make life difficult for taxpayers: Now you may face a patent infringement suit if you use a tax strategy that someone else thought of first.

[...] Why would Congress pass a law allowing such a thing? The answer is that it did not. But a U.S. appeals court ruled in 1998 that business methods could be patented, and since then the U.S. Patent and Trademark Office has issued 50 tax- strategy patents, with many more pending.

[...] One can imagine lawyers and accountants rushing to the patent office as soon as a new tax law is passed, seeking to claim credit for dreaming up ideas that were made possible by the new tax law. Lobbyists who get tax breaks inserted into such bills would be in a preferred position to win the race to patent them.

In an article in Legal Times this week, Paul Devinsky, John Fuisz and Thomas Sykes, who are lawyers with McDermott, Will & Emery, suggested that a company might figure out a tax strategy that would save it a lot of money and then patent it. Then the company could refuse to license the patent to its competitors, thus raising their cost of doing business.

Tax patents, the lawyers wrote, amount to “government-issued barbed wire” to keep some taxpayers from getting equal treatment under the tax code.

Why limit this important reconsideration to tax policy? How about a revisiting of the entire notion of business method patents?

Related, from the software patent realm: I.B.M. Sues Amazon.com Over Patents

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